It’s the week of “big red bow in the driveway” ads—or at least, it used to be.
The next two months will be a test for the auto-retailing sector, which traditionally uses the October to December period to clear out old inventory, advertising their year-end savings events and promoting new models for the year ahead.
Will this year bring the same advertising flurry? With global digital ad spending growing slower than forecasted, retailers are uncertain about how rising interest rates and inflation will impact deal-hunting holiday shoppers.
Ford, for example, has said it will take Tesla’s low-budget marketing approach in the new year, responding to the economic downturn by slashing advertising. That’s a departure from the trend set by the 2022 Super Bowl, which automakers used to raise the profile of their EV models.
“We spend US$500 to US$600 per vehicle on public advertising. Get rid of all of it,” said Ford CEO Jim Farley at a conference earlier this year. “If you ever see Ford Motor Co. doing a Super Bowl ad on our electric vehicles, sell the stock.”
Other automakers have taken a different tack. Hyundai Canada kicked off a new advertising platform in October, becoming the “Official Electric Vehicle of the NHL,” launching a Canadian-Korean communications campaign, and tapping the Quebec musician Marilou as a provincial brand ambassador. BMW launched campaigns in October focused on female EV buyers, with Canadian influencers like Sasha Exeter and Clearco CEO Michele Romanow. (Ford, for all its bluster about public advertising, worked with the agency BBDO Canada on a campaign using its EVs to power the set of a short art film.)
At the dealership level, a U.S. survey by the marketing firm PureCars found that in the second quarter of the year, 52 per cent cut ad spending, while 23 per cent increased it.
Underlying these new ad strategies is a battle over who owns the customers. Dealerships have traditionally been the touchpoint for car shopping, analysts at EY wrote earlier this month. But direct-to-consumer EV brands like Tesla, Lucid and Rivian have prompted automakers to pursue digital advertising and convert more sales directly through e-commerce.
“The main focus is customer retention. … It’s not just them coming in, picking up the car anymore. It’s about them coming in and becoming ‘part of the family’ at the dealership level,” Marjie Richardson, an Ontario-based senior digital media strategist at PureCars, told The Logic in an interview. “Really trying to advertise that they do service … branding more as a garage versus just a dealership.”
One argument for many automakers and dealerships to continue with advertising is that many EV models debuting in 2023 will be unfamiliar to potential buyers. Twenty-three per cent of survey respondents reported not being familiar with battery technology as a reason to avoid EVs, with 16 per cent saying they don’t understand how they work, according to a Leger poll last year for the Canadian Vehicle Manufacturers’ Association and Global Automakers of Canada.
PureCars anticipates digital searches for EVs will surpass internal combustion engine-vehicles by 2025, giving the industry just over a year to mount its ad campaigns for EV buyers.
“I’ve seen, on the dealership level, two different ways to tackle this at this point. I do have some dealers that have actually built out an e-commerce page on their website where you can go in and actually reserve your electric vehicle directly on the dealer’s website. So they’re very much taking that Tesla kind of focus,” Richardson said.
On the flip side, she said some dealers are picking up where automakers leave off, focusing on localized knowledge like insurance coverage and electrical wiring for home EV charging.
“I’m seeing some other dealers becoming more present through their digital platforms helping educate the consumer, which is going to build trust.”
Another mark against flashy ad campaigns: Supply-chain snarls mean there isn’t a whole lot of inventory to sell to new clients. PureCars’s survey said two of the biggest reasons dealerships had cut ad spending was they were “more focused on inventory acquisition” and had “more customers than cars.”
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